VietNamNet Bridge - Vietnam’s textile-garment industry is facing major challenges of low labor productivity and a serious shortage of textile and dyeing materials.

At a recent seminar on Vietnam's garment industry in Ho Chi Minh City, Le Tien Truong, General Director of the Vietnam Textile and Garment Group (Vinatex), said that participating in the Trans-Pacific Partnership (TPP), Vietnam's garment industry is said to have competitive advantage.

The most clear evidence is in the 2007-2014 period, when Vietnam had no new trade agreements and many countries saw the fall of exports of garment-textile products.

Only Vietnam maintained growth of over 10% (entirely based on its competitiveness). In terms of technical productivity, the Vietnamese garment industry reached the world’s top 3.

"However, to get this great benefit, Vietnam also experienced many challenges and barriers regarding materials.

Typically, in 2015, Vietnam exported $27.5 billion of garment-textile products but it had to spend $14 billion to import raw materials.

Of the remaining $13.5 billion in the country, we spent $6 billion to pay salaries and over $ 7 billion for domestic raw materials.

Thus, Vietnam needs to overcome the problem of input raw materials," said Truong.

Vinatex CEO added that in Vietnam, businesses only need $3,000 to invest in a position of garment worker (people and technology) but up to $200,000 for a fiber or dye worker.

Therefore, it is extremely hard for small and medium enterprises to invest in the textile and dyeing industry. Vietnam needs up to $15 billion to invest in the industry.

"This figure is really a challenge for local businesses. So when the market opens, the arrival of foreign investors is unavoidable. So, to ensure healthy competition, the State needs to manage the market properly, with strict legal institutions in both technology and environmental protection,” Truong said.

He also urged local businesses to work closely together to create an overall value chain.

Dr. Nguyen Duc Thanh - Director of the Vietnam Economic and Policy Research Institute (VEPR) - said to realize the opportunities of integration, in addition to the efforts of enterprises, the State needs to change institutions to make good policies for the development of enterprises.

Professor Hansjörg Herr from the Berlin School of Economics said Vietnam should not float the market decisions, but creates an environment for coordination between the authorities and enterprises to enable enterprises to have fast access to the creative economy.

Besides, the Vietnamese state should have good defense solutions to protect domestic enterprises.

Nam Nguyen